Finance skills shortage looms as firms create jobs and candidates stay put

Financial services organisations in the UK are hiring again at a reasonably rapid rate. If the new-found appetite for recruitment continues, there could be 26,000 more employed in financial services by the end of Q2 than the same point in 2013. And yet, it seems, employees are still staying where they are.

The majority of employers across financial services are intending to bolster employment over the next three months, following a six-year high final quarter of 2013 and Q1 2014, according to the latest CBI/PwC quarterly Financial Services Survey. It’s anticipating 26,000 more jobs than this point last year by Q2, taking total employment across the sector to 1.16m. This is still 58,000 fewer jobs than at the end of 2008, however.

In the banking sector, a balance of 34% if firms surveyed said that they were hiring in Q2 this year, and 53% in the securities industry said they intended to bolster headcount. This is a far cry from June last year when a balance of -59% of banks and -7% of securities firms said they were recruiting.

There is, however, a mismatch between the hiring plans of financial services organisations and employees departing for pastures new. A balance of -34% of banks said they employee turnover was on the up and -7% of securities firms. This suggests that the jobs are being created, but there’s still little confidence among financial services professionals.

Perhaps it takes a sustained period of optimism before candidates feel comfortable venturing on to the job market. In fund management, where employment has been on the up for the past 18 months, 45% cited employee turnover as an issue. This may be down to the fact that a balance of nearly 70% of firms said they were hiring in the next quarter.

Another explanation could be that hiring is still isolated in specific areas of the business where financial services firms feel compelled to hire. It’s unlikely that many fixed income traders will be feeling particularly safe in their jobs currently, after all.

As the chart below shows (in contrast to last quarter), the biggest driver of  recruitment is still a combination of compliance and a shift in business strategy, while increased demand for services ranks a distant second. The suggestion, therefore, is that it’s a good time to work in risk and compliance, as well as change management, but firms are still managing their cost base.